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How does dividend yield work? Want to know how much cash flow you're getting for every peso you've invested in a company? The Dividend Yield can give you an idea of how a company's dividend payments related to its stock price.
What is Dividend Yield?
A dividend yield is a financial ratio that indicates how much shareholders are paid in the form of dividends every year.
What are the importance of dividend yields?
Companies with a higher dividend yield could be a good investment opportunity because:
How to calculate dividend yield?
Just take the dividend amount multiply by 90% (less 10% for tax) , divide it by the stock's price, and then multiply by 100 to convert to a percentage.
Net Dividend Yield = Dividends x 90% / Stock Price x 100
An example, HOLCIM PHILIPPINES, INC. (HLCM) declare a cash dividend Php 0.98 per share, and then the closing stock price per share is Php 14.78. Using the stated formula, Holcim dividend yield as:
5.96% = 0.98 x 90% / 14.78 x 100
I hope you have now understood the concept of dividend yield.
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ABOUT THE BLOGGER
Hi, I'm Ralph Gregore Masalihit!
An RFP Graduate (Registered Financial Planner Institute - Philippines).
A Personal Finance Advocate. An I.T. by Profession. An Investor. Business Minded. An Introvert. A Photography Enthusiast. A Travel and Personal Finance Blogger (Lakbay Diwa and Kuripot Pinoy).
Currently, I'm working my way toward time and financial freedom.